Sell-Side Advisory
Experts at maximizing the valuation of your business.
Sell-Side Advisory Services Offered
Our investment banking professionals will execute your transaction with the utmost skill, tenacity, and tact resulting in faster closing times, higher probability of close and market-leading valuation multiples.
Exits
Mergers
Divestitures
Our 8-Step M&A Process
We follow a proven process within bulge-bracket investment banks to ensure you get the best deal possible.
01. Early Preparation
This stage has the biggest impact on valuation. Clients utilize the 3 best tactics in M&A: i) the best approach to deals is flirt > date > marry; ii) the best laid plans don't survive contact with the enemy - so we get early feedback from the enemy; and iii) the best businesses get bought not sold - we encourage bids to take deals off the market.
02. Final Preparation
When you are ready to formally begin the exit process we will prepare a deal teaser, virtual dataroom and a 50+ page confidential information memorandum (CIM).
03. Marketing
Once all deal materials are finalized, we will being marketing to all relevant targets. We pride ourselves on having strong relationships with acquirors and can market your deal to senior decision makers.
04. LOIs
As targets start issuing LOIs, we help you compare terms on a like-for-like basis. We help you negotiate and select the most preferential terms for your business.
05. Due Diligence
We will partner with you throughout the entire due diligence process ensuring you are prepared to accommodate any additional materials and information.
06. Documentation
Together with your legal advisors we will help you with the signing of all key documentation.
07. Closing
Once documentation has been signed we ensure payments are processed in an agreed timely fashion.
08. Post Completion
Post completion we remain in communication to ensure any deferred or earnout component are being acted on as agreed.
What Is Involved In Early Preparation?
The first step is for our team to do a 4 week deep dive into your business.
This includes:
- Financials: analysis of monthly P&L, 3 year historical financial statements and forecasts.
- Platforms: review of data from your sales channels e.g. Shopify, Amazon Seller Central, wholesale, retail etc.
- Questionnaire: review of your responses to our granular diligence questionnaire. It has been developed over 3 years and contains all the questions acquirors will ultimately ask.
- Valuations: discussion current and potential valuation range.
An initial teaser is key to succinctly articulate the acquisition opportunity to potential acquirers.
Components:
- Acquisition highlights.
- Category growth.
- Company snapshot.
- Brand overview.
- Supply chain.
- Products.
- Channels to market.
- Marketing.
- Growth opportunities.
- High-level financials.
- Exit rationale.
“No battleplan survives contact with the enemy”.
It is important to embrace early feedback from a small number of acquirors (the “enemy”).
There are 4 different types of institutional acquirors we can approach depending on the business:
- Strategics.
- Private equity firms (either as a platform deal or a bolt-on to an existing portfolio company).
- Family offices.
- Aggregators.
Based on the work of the prior 3 stages we will recommend action items.
Short-term Examples:
- Hire a NED who has sold a similar business.
- Audit of the manufacturer for the VDR.
- Obtain a QOE report.
Medium-term Examples:
- Invest time to better articulate the growth plan e.g. NPD.
- Consider inorganic growth i.e. acquisitions.
- Improve the forecasting model.
Long-term Examples
- Increase recurring revenue – this has a significant impact on valuation.
- Upgrade auditor and produce annual audit.
What are the benefits of early preparation
- Incorporating feedback from acquirors means the ‘pitch’ is stronger.
- ”The best businesses get bought, not sold.” During stages 1 and 2 we welcome bids to take your firm off the market.
- Additional time to identify every firm to approach and thereby make the auction as competitive as possible.
- The flirt > date > marry approach to dealmaking yields the best results. For example, it enables the slower moving acquirors (e.g. strategics) time to get your business on their radar.
Common Questions From Sell-Side Advisory Clients
Before launching a merger and acquisition (M&A) transaction process, it is important for owners to take mindful inventory of their personal and professional goals, which may include valuation expectations, timing of a transaction, the cultural profile of the optimal acquirer, personal role post-closing, management rewards and incentives, impact on long-term growth opportunities, leadership succession, and customer and employee fit.
If you are a business owner interested in selling your company or raising capital, or you are a strategic buyer seeking to make an acquisition, you most likely will be considering engaging the services of an investment banking advisor.
An important step in securing the right partner is to understand their approach to compensation.
Typically, the client and the investment bank negotiate the fee structure at the beginning of the deal process to ensure that the terms are optimal for both parties and that there is transparency moving forward.
Business owners should weigh several factors to ensure that they are receiving the best value from their investment bank including services offered, composition of the deal team, firm success record, industry expertise, and access to the most relevant investor and buyer relationships.
The fee structure for M&A transactions is typically comprised of the Retainer Fee, Success Fee and Incentive Fee.
Many financial due diligence assignments, both buy-side and sell-side, include a step called the Quality of Earnings Review, or QofE.
While not the same as an annual financial audit, the goal of the QofE is to examine a company’s historical financial results and analyze and validate the pro forma EBITDA at normalized levels to support the purchase price/valuation of the transaction target.
On the sell-side of a transaction, a QofE review may be recommended by the investment banking team, advising the seller to help accelerate the pre-letter of intent (LOI) deal process to alleviate financial due diligence concerns and shorten the timeline of post-LOI confirmatory due diligence.
On the buy-side of a transaction, the review’s audience is typically a potential buyer, investor, or lender who uses the findings in the review to ultimately validate the assumptions used to determine the valuation/purchase price of a prospective transaction.
If you’re considering a sale of your business, one essential document in this process is the Confidential Information Memorandum (CIM) or increasingly a Confidential Information Presentation (CIP).
Simply put, a CIM is a comprehensive presentation that serves as a marketing document during an M&A process. It is crafted by your advisor, in close conjunction with you and your management team, and outlines nearly everything a potential buyer would need to know before submitting an initial offer.
Every CIM is uniquely tailored to the unique differentiators that make the company a valuable and attractive asset. That said, there are a few common elements of a CIM that will help provide an all-encompassing presentation to effectively market your company.
Contact Us
Want to learn more about the Mergers and Acquisitions Advisory services we provide for owners, investors, and creditors of lower middle-market companies? Reach out to us today!